Under UCC 4-407, the bank that pays a check over a stop payment order is subrogated to the rights:
(1) Of any holder in due course on the item against the drawer or maker;
(2) Of the payee or any other holder of the item against the drawer or maker either on the item or under transaction out of which the item arose; and
(3) Of the drawer or maker against the payee or any other holder of the item with respect to the transaction of which the item arose.
So, if your customer had a claim against the payee to recover payment had the payment not been stopped, you now stand in the legal position your customer would have been in and can attempt to recover the payment to Customer B. But you can't do it via a charge-back. If the dollar amount is sufficient to warrant it, discuss the problem with bank counsel.
John S. Burnett
Fighting for Compliance since 1976
Bankers' Threads User #8